Suppose you could build the perfect taxi system. How much would fare be?
Suppose a taxi driver makes the median annual income of full-time employed Americans ($39,336/year) while working for a standard full-time-equivalent number of hours (50*40 = 2000 hours/year). That corresponds to an equivalent rate of $20/hr.
To estimate the cost of operating the vehicle, let’s consider the 2011 Toyota Camry Hybrid, a popular taxicab in the Boston area. These cabs seem to be used for only a few years before being resold, so let’s consider only the first 5 years of ownership. Thanks to the helpful figures from Edmunds.com, we can see that the total expected cost, excluding fuel, comes to $32,092, or $6,418/year, raising the target hourly rate to $23/hour.
According to the Federal Government, the Camry Hybrid gets about 31 M/G in the city (which is of course where cabs are used). At current retail gas prices of about $3.54/G, this represents a fuel cost of $0.11/mile.
Revenue of $23/hour is $0.38/minute, so in a hypothetical perfect taxi system, a reasonable cab meter rate might be $0.38/minute + $0.11/mile. If we estimate an average speed of 12 M/H (0.2 M/minute), then we can trade time and distance for an equivalent rate of $0.40/minute or $2.00/mile. Notably, almost all the of the cost is profit; by this estimate the expenses are almost negligible.
In Boston, the meter rates are $2.80 per mile plus a fixed fee of $2.40 on average. However a tip of 10-15% is expected, making the total closer to $3.14/mile plus a fixed charge of $2.67. That’s close enough to our coarse estimate, especially if we assume that drivers spend a third of their time available, and hence not making a fare.
Now suppose that our driver is independently wealthy and operates the vehicle at no charge. Then the remaining cost is $3.20/hr, resulting in a meter rate of $0.05/minute + $0.11/mile, or about $0.36 per mile. That’s about 10% of current cab fares. It’s also low enough to drive across Boston for less than T fare … a lot less, if you are traveling in a group.
Of course, I don’t expect to discover a hidden reserve of volunteer cab drivers. I do, however, expect that self-driving cars will be arriving commercially before too long.
Simple economics suggests that their arrival will be the end of conventional public transport.